Home equity borrowing costs have declined once again as HELOC rates and home equity loan rates continue their downward trend. According to real estate data firm Curinos, the average HELOC rate now stands at 7.23%, dropping just two basis points from one month ago, while the national average rate on a home equity loan has decreased 12 basis points to 7.44%. These rates apply to applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio of less than 70%.
The recent decreases bring both products close to their 52-week lows, with HELOCs reaching as low as 7.19% and home equity loans hitting 7.38% in early December 2025. However, finding lenders offering second mortgage rates at or below these national averages requires careful comparison shopping, as pricing varies significantly between institutions.
Why Home Equity Rates Matter Now
The Federal Reserve estimates that homeowners currently hold $34 trillion in equity. With primary mortgage rates stubbornly hovering near 6%, many homeowners with low existing mortgage rates face a dilemma when trying to access their growing home value. A second mortgage through a HELOC or home equity loan offers a solution without forcing borrowers to refinance and lose their favorable primary mortgage rate.
Additionally, the recent drop in the prime rate to 6.75% has contributed to lower home equity borrowing costs. Home equity interest rates typically consist of an index rate, often the prime rate, plus a lender-determined margin. For example, a lender adding a 0.75% margin would result in a HELOC rate of 7.50%.
Understanding Rate Structures and Variations
Lenders maintain considerable flexibility when pricing second mortgage products, making shopping around essential. Your final rate depends on your credit score, existing debt load, and the credit line amount relative to your home’s value. Meanwhile, home equity loans may carry different margins because they offer fixed-interest rates rather than variable ones.
National average HELOC rates often include introductory promotional rates that may last only six months to one year. After the promotional period ends, the interest rate typically becomes adjustable and likely increases. In contrast, home equity loans with fixed rates are unlikely to feature introductory teaser rates.
Finding the Best HELOC Rates and Lenders
The best HELOC lenders combine low fees, fixed-rate conversion options, and generous credit lines. HELOCs provide flexibility, allowing homeowners to borrow and repay repeatedly up to their credit limit. Some lenders currently offer particularly attractive introductory rates, such as FourLeaf Credit Union’s 5.99% APR for 12 months on lines up to $500,000, though this converts to a variable rate afterward.
Furthermore, borrowers should pay attention to minimum draw requirements—the initial amount lenders require you to borrow from your equity line. These requirements vary by institution and can impact your borrowing strategy. Home equity loan lenders may be simpler to compare since the fixed rate remains constant throughout the repayment period, eliminating concerns about future rate adjustments.
Current Market Conditions for Home Equity Borrowing
Home equity rates currently range from nearly 6% to as much as 18% depending on creditworthiness and geographic location. For homeowners with low primary mortgage rates and substantial equity, obtaining a HELOC or home equity loan allows access to funds for home improvements, repairs, and other expenses without sacrificing favorable existing mortgage terms.
A typical example illustrates the commitment: withdrawing $50,000 at a 7.50% interest rate results in monthly payments of approximately $313 during the 10-year draw period. However, payments increase during the subsequent 20-year repayment period, effectively creating a 30-year loan structure. HELOCs work best when borrowers repay balances within shorter timeframes.
As rates continue fluctuating in response to broader economic conditions and Federal Reserve policy decisions, homeowners considering home equity products should monitor market trends closely. The trajectory of future rate movements remains uncertain and will depend on economic indicators and monetary policy adjustments in the coming months.
